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Economic emergency

Rising education costs translate to long-term indebtedness for a generation of new veterinarians.

BENSALEM, PA.— Dr. John Rossi questions his decision to become a veterinarian.

The 2005 Penn graduate practices at a suburban small-animal hospital outside
Philadelphia. At 29, he owes more than $150,000 for veterinary school, and,
combined with $50,000 in undergraduate debt, maxed out on federal loans during
his fourth year. Even some private lenders won’t let him borrow anymore.
Now unsatisfied with his career, he’s finishing a master’s degree
in bioethics and plans to start a PhD program this fall. His current monthly
loan payment: $800. In the end, Rossi will rack up close to $300,000 in loans.
His wife, a resident, owes nearly as much.

Rossi represents a generation of veterinarians accustomed to living on borrowed
money and forfeiting a larger percentage of future earnings to pay
down educational loan obligations. It’s a check most will write until
they near age 60.

While indebtedness appears intrinsic to the veterinarian-in-training, the reality
is it’s becoming unmanageable, borrowers say. Average educational debt
is rising faster than the consumer price index,and experts warn that if left
unrestrained, the pattern will erode new veterinarian numbers and have global
implications.

Being shackled with monthly loan statements the size of mortgage payments is
tough, Rossi says, but when starting salaries are less than $55,000 a year,
it’s a slap in the face.

“I once saw a study that suggested well over 50 percent of doctors and
lawyers would not recommend their profession to a student,” he says. “I
think the number’s even higher for new veterinarians. We want to make
more money and have a better schedule rather than see 40 cases a day and script
out steroid after steroid because owners don’t want to do anything else
to treat patients.”

Statistics paint an even darker picture. A review of American Veterinary Medical
Association (AVMA) data reveals educational debt represented 184 percent of
entry-level salaries for new graduates in 2007,compared to 91.6 percent in 1980.
The association’s most recent survey shows last year’s mean educational
indebtedness totaled $106,969, although some students are saddled with $250,000
or more in loans. Tuition increased nearly 100 percent
since 1997, yet starting salaries rose just 46.5 percent during the same 10-year
period. Interest rates now top at 6.8 percent, and the vast majority of 2007
graduates reported to AVMA that they accepted positions paying between $47,000
and $58,999 a year.

Upheaval is inevitable, contends Richard Vedder, PhD, former senior economist
with the U.S. Joint Economic Committee and Ohio University distinguished professor.He
calls the debt burden students face compared to salaries “shocking.”
If the cost-earnings ratio fails to soon balance, students simply won’t
be able to afford a career in veterinary medicine, he claims.

“This trend will be unsustainable in far less than a generation,”
predicts Vedder, who sat on the U.S. Secretary of Education’s Commission
on the Future of Higher Education in 2006.“At some point,no one will want
to go to veterinary school. The word will be out that you’re assigning
yourself to a life of utter poverty.I can only predict that disaster is a few
years ahead.”

Sounding the alarm
If Vedder’s assessment seems exaggerated, consider Dr. Andrea Honigmann,
who lives paycheck to paycheck on what she deems above-average earnings working
as an associate at a suburban Philadelphia small-animal practice. Graduating
from Iowa State University in 2006 nearly $300,000 in debt, she describes her
$1,670 monthly loan payments as “crippling.”

“I knew I would be saddled with loans, but I don’t think I realized
how this would affect me once I got married. My debt will restrict how many
children I can have.”

That reality manifests in a nine-page paper authored by James F.Wilson, DVM,
JD and University of Pennsylvania School of Veterinary Medicine (Penn) adjunct
professor. The work, titled “Inviting the Elephant into the Room”
has incited traveling dialogue among the profession’s leaders, with meetings
at January’s North American Veterinary Conference, the AVMA show in July
and this month’s American Animal Hospital Association convention.

Wilson, who’s donated hundreds of hours to researching the numbers, says
it’s no secret that the current veterinary-school model is “broken.”

Yet to identify the crisis, he says its impact must be recognized by a critical
mass, and only then will leaders develop an action plan.

The task is daunting. Fixing the problem is like trying to save Social Security,
tackle global warming or take on the nation’s health-care system, he says.

“No one wants to face this because it’s too disheartening, it’s
political and there are no easy, clear solutions,” Wilson says. “That’s
why this is so frustrating, I think. The bottom line is the return on investment
is a lousy one, and it’s now being recognized. It is not what it used
to be for veterinary medical students.”

That change will lead to a drop in the quality of applicants, he adds.

“I think it’s already happening. Part of the reason we have 80
percent women in vet school is buried in this issue,” Wilson says.

Popular thought indicates the gender shift largely relates to economics as
veterinarians make up one of the lowest-paid medical groups, the National Commission
on Veterinary Economic Issues reports. Gender studies show women traditionally
are not as interested in the bottom line, which has lured men to more lucrative
professions.

Dr. Michael Chaddock, spokesman for the Association of American Veterinary
Medical Colleges (AAVMC), acknowledges the demographic shift and admits applicant
numbers are flat.

“It’s discouraging.We want to be sure we’re competing with
other health professions to get the brightest students,”he says.

Grass is greener
The escalating cost of higher education is not a phenomenon unique to veterinarian
medicine.Yet salaries in human medicine and dentistry are healthier by comparison.
Eight years ago, the KPMG MegaStudy reported physicians’ median income
at $160,000 in 1995, compared to $122,860 for dentists and $61,532 for DVM practice
owners.More recent statistics compiled by the American Medical Student Association
reveal 2006 public-school graduates incurred a median debt of $119,000,and those
who attended private institutions owed $150,000.Yet mean starting salaries for
general internists in 2002 totaled $124,000 and $109,000 for pediatricians —
significantly higher than the starting salaries veterinarians reported earning
even five years later.

Dentists, on the other hand, owed an average educational debt of $141,836 if
they graduated in 2005. An American Dental Association survey from 2006 also
reveals that full-time doctors just two to four years out earned average net
incomes of $133,323 a year.Veterinarians who exclusively practiced small-animal
medicine and were three years to four years out of school reported earning median
annual incomes between $70,414 and $74,027 in 2005,AVMA says.

Measured against those disciplines,veterinary medicine’s debt-to-income
ratio does more than negatively influence a graduate’s ability to own
a home, buy a practice or marry. It spills into society’s collective consciousness,
manifesting in a gender imbalance, flat application numbers, lower-quality candidates
and a rush of veterinary students leaving general practice for higher earning
potentials promised by specialty-board certification.

“We often think of these as national issues distinct from their impact
on students, but they have major consequences for them,” she says.“DVM
students have seen room-and-board costs increase almost 20 percent in the last
five years.Average health-care costs have risen for our students by just over
30 percent since 2002. We often forget that these students not only pay tuition,but
also simply live during their time in their programs.”

It’s a concern Dr. Jim Lloyd, an associate dean at Michigan State University,
says he thinks about daily.

“There’s no question that if this continues, there will be some
economic distress, more than there is currently,” he says.“Most
students don’t choose veterinary medicine to get rich, and with good financial
planning there are ways to repay the debt. Still, we have a lot of students
expressing some great concerns. It’s a real challenge.”

Blame game
Lloyd attributes double-digit percentage increases in tuition to shrinking state
support. Dr. Timothy Boosinger, dean of Auburn University’s veterinary
medical program,adds that virtually no significant scholarships or grant programs
exist for DVM students, who, incidentally, often spend loan dollars on new cars
and cable television instead of living the frugal lifestyle of older generations.

“I don’t think you can blame it all on that, but it’s an
influencing factor,” he says. “Our costs of heating and health care
also have gone up.And loans are contributing as well. It’s too easy to
borrow money, and I think there’s an element of that in this complex issue.Certainly,there
is no simple fix.”

Vedder, an expert in the economics of higher education, laughs at the excuses
he says educators use to mask “highly inefficient operations.”He
counters that companies are burdened by the same rising health care and utility
expenses but have not increased consumer prices in line with higher education.

“The deans always find someone to blame it on other than themselves,”
he says. “The truth is they are not lying awake at night wondering about
the student- debt burden. They’re worrying about raising their program’s
rankings, building new buildings and hiring professors. That, to me, is the
underlying problem at work here.”

“Nowadays, indebtedness is forcing new graduates into a lower middle-class
lifestyle when DVMs traditionally earned an upper middle-class living,”
he says.“This market will right this situation by creating a shortage
of veterinarians so severe it will manifest itself in higher pay, or we’ll
put a fix on this loan thing.”

Faced with such an outcome,Boosinger, who runs one of the cheapest veterinary
medical programs in the country, says the colleges’ leaders are doing
what they can.

“You can argue that we’re not doing much, but we’re taking
steps to address this,” he says.

Taking off the blinders
For Mike Nolan, a third-year DVM-PhD student at Virginia Tech, a fix isn’t
coming fast enough.The 24-year-old insists he and his classmates do not live
an extravagant lifestyle. Still, he is determined to bypass the $55,000-a-year
jobs in general practice for a career in industrial pathology or academia.The
reason: He wants to be able to pay off the $200,000 in loans he’s accrued
during his education.

“I figure I’ll need around $1,800 a month and a bare-bones minimum
annual salary of $85,000, and that’s undershooting it quite a bit,”he
says.“The high cost of veterinary education has pushed me to think about
specializing. It’s why I’m looking to go into pathology, where starting
salaries are over six figures.When I’m done, I’ll probably be a
quarter of a million dollars in debt.”

Wilson says most students aren’t as savvy about what they owe, preferring
to ignore the burden despite the rash of colleges requiring them to create budgets
to assess their living expenses after graduation.

Still, knowing it on paper and being confronted with the reality are two different
things, Rossi says.

“I think one of the big sociological issues is that space in vet school
programs is still so limited,and there’s such fierce competition, that
students have blinders on,” he says.“You’re just so happy
to be in school, you don’t think about the money you’re going to
owe compared to what you’ll be paid. The schools play up to that with
the ‘you’re so lucky to be here’ attitude. Students are the
main source of funding,and that environment is not conducive to lowering the
cost of veterinary education.”